Five Most Important Facts About Argus Modeling
To understand the importance of financial modeling tools for commercial real estate, you need to know about Argus Modeling. Argus is a computer software created specifically to keep commercial brokers, commercial real estate investors, and developers competitive and efficient.
What is Argus Modeling?
This modeling method is a financial breakdown of a lease over time, allowing you to model commercial leases without building an Excel model from scratch each time.
The current version is Argus Enterprise. Argus helps build out cash flow projections for multiple leases. These leases have complex reimbursement structures, varying rent escalation schedules, re-leasing assumptions, and renewal probabilities that create realistic scenarios which feed into cash flow.
Giving commercial real estate professionals, who lease office, industrial, retail, or hospitality spaces, all the data to analyze a project and determine its project yield.
Below are Five important facts that you need to know about Argus Modeling:-
1. Argus Modeling is easier to use than you might think.
Argus runs on input. Upon input Argus will give you the cash flows across the given leasing periods. You can easily edit and change any of the inputs after importing them or as a core assumption.
2. It is only for commercial real estate.
If you are in finance or acquisition of office space, retail, hospitality, or industrial spaces, you will most likely be using Argus in your underwriting. Argus is not built to analyze residential rental properties.
3. Argus is often used in conjunction with Excel.
To get cash flows, the lease information into Argus to produce models. These reports are often exported back into your Excel model or another proprietary system for analysis.
4. Most multi-family firms do not use Argus.
Multi-family firms rely on Excel for their modeling to calculate returns.
5. Documents necessary for Argus modeling
You will need lease data and rates for the lease period, operating expenses for the current year, the current rent roll, expense reimbursements, contracted lease rate changes, current vacancy rate, and inflation assumptions. This data can also come from your existing Excel or Argus files.
The Argus modeling process is easy and will have you analyzing cash flows in 10 minutes or less.
This is achieved one of two ways. The fastest way is starting with an already existing Argus file. In Argus, you’ll create a new portfolio or sub-folder in scenarios, import your properties, and refresh the system. Your data is now ready to be changed and reviewed.
If you’re starting from scratch, the input is still relatively easy. All you need to do is input in the data, and the system calculates everything. There are templates within Argus to choose from for the core assumptions you use most often. Upon selecting a template, it will populate with current core assumptions, and you can edit to reflect your own.
The models will have a handful of items built-in like assumptions, capitalization, resale Cap rate, and direct cap value for the first-year valuation. You can copy and paste data from an excel document you are using. There are templates for operating expenses and tenant information which can all be customized for your business. After you add a property to the model, you can highlight and export any chosen reports to excel.
As an Argus modeling Company, our Services Hub can help you stay competitive and efficient. Through the Services Hub, you’ll have access to an on-demand team of real estate analysts who will build Argus models for you and provide you with support and data. This allows you to make decisions faster and with confidence.